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CEWS audit strategy is intimidating

The Canada Revenue Agency (CRA) has started to audit the Canada Emergency Wage Subsidy (CEWS), and it took employers and accountants by surprise. The purpose of the CEWS audit program, according to CRA, “is to identify the types and levels of non-compliance with the CEWS legislation”. Employers and accountants are subject to stiff penalties if they are found liable for making false statements or omissions.

CRA sent out a nine-page audit request asking for a volume of information, including the corporate minute books, employment contracts and two years of bank statements. Nobody expected a request in so much detail asking for information that does not seem relevant.

The start of the CEWS audit follows the policy pronouncement by CRA requiring all employers to report employment and retroactive payments on the T4 for defined periods under new information codes so the agency can validate payments made under the Canada Emergency Response Benefit, CEWS and the Canada Emergency Student Benefit Program.

You will recall that in the September 23 throne speech, Justin Trudeau vowed to extend the CEWS program into the summer of 2021.

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